Sustainable Investing Series in association with BNP Paribas Asset Management

Sustainable investment in Asia: Ready to take off

Broader adoption of environmental, social and governance (ESG) investing is now accelerating in Asia. In particular, we're seeing a greater push by leading institutions or governments in embracing ESG.

In Japan, the signature of the UN-backed Principles for Responsible Investment (PRI) by the Government Pension Investment Fund (GPIF) in 2015 led to a 6,690% growth in sustainable investment assets between 2014 and 2016 from a low base.

Over the last year, we have seen sustainable investment move to the forefront in Asia, with an ever-increasing number of events, conferences, media articles and conversations with our clients focusing on ESG.

In China, the government has been promoting environmental investments, by for example driving forward issuances of green bonds - a market in which China has now become the largest issuer in the world. In Hong Kong, there are now 25 signatories to the PRI, eleven of which joined since 2017. In Malaysia, the KWAP pension fund signed the PRI in February 2018, confirming its increasing focus on promoting better ESG practices.

But there's still much work to be done. Although interest in investing sustainably has been growing rapidly in the region, ESG in Asia compared to other geographies is still in its infancy. According to the Global Sustainable Investment Review (GSIR) 2016, while globally sustainable assets stood at US$23 trillion, when zooming in to Asia ex-Japan, the total figure was only US$52 billion, representing less than 1% of Asia's total professionally-managed assets.

BNP Paribas Asset Management (BNP Paribas AM) is playing a significant role in driving ESG adoption in the region. We were pioneers for promoting sustainable investment in Asia. We believe that upholding the highest sustainability standards starts from within, which is why we conducted sustainability training sessions for investors.

In 2018, we organized a number of client training programmes on sustainable investment across Asia, including sessions by our Investment Academy. We also took part in the third Sustainable Future Forum in Singapore, which was a huge success, attracting 500 delegates including keynotes speakers such as Bronwyn King, Founder & CEO of Tobacco Free Portfolios. We also trained our staff in Hong Kong, Singapore, Japan, Taiwan and Malaysia through sessions in partnership with the CFA Institute.

In the distribution market, our thematic environmental portfolios are being on-boarded by more and more distributors in the region. These portfolios fit well with the appetite of Asian investors for funds that are investing in businesses which are seizing promising environment-related opportunities in areas such as water, new energy, waste or sustainable food.

In the institutional space, we are running several ESG mandates, including one focusing on Malaysian equities. Our pioneering stance on sustainable investment in Asia has been recognized with 19 awards in the 2017-2018 period.

Building on these solid foundations, we aim to intensify the promotion of our existing investment solutions, while also developing new offerings and partnerships to meet the sustainable investment needs of Asian investors.

Investing responsibly for future generations

The global economic crisis of 2008 has led to a rethink of the role finance plays in our society. It has underlined the necessity for financial industry stakeholders to align themselves with the long-term interests of our economy.

Climate change, population ageing and social inequalities pose new risks that are complex to grasp, and which could destroy value for investors both in the medium and long term. It is our duty to take into account these risks: for our clients, of course, but also for our staff, our shareholders, our suppliers and our partners, as well as society as a whole and for future generations.

At BNP Paribas AM, we believe in a world with a low-carbon, more sustainable and more inclusive economic growth model. We are taking steps to direct our clients' investments towards sustainable solutions, and at the same time using our influence as shareholders to support those companies in which we invest in their transition to more responsible business practices.

It is also our role to share our expertise and skills with our peers and with those institutional investors around the world that are committed to focusing public policy on the creation of a global economy that is more respectful of the environment and more equitable.

Lastly, like every company, we seek performance and growth. But growth has no meaning unless it benefits all of society.

Our vision is clear: to contribute to a better future through our responsible investment policy.

This article is first in a series on Sustainable Investing by BNP Paribas Asset Management. The next instalment will explore how ESG principles are being adopted in investing in emerging market debt.

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Date

7 Jan 2019

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